Key points
- Treasury advisers weigh AI debt against Treasury demand
- Where AI borrowers are feeling the squeeze
- How the committee's forecast compares with our AI debt tracker
The Treasury Borrowing Advisory Committee told the US Treasury on November 4 that it sees no evidence AI-related corporate borrowing has crowded out demand for long-term government debt. In its report, the committee of large banks and investors also said the financing cycle remains in its early stages.
The committee's slides estimate tech-related debt issuance at about $586 billion in 2026 and $735 billion in 2027. They also say crowding out is "most evident within the technology ecosystem" rather than across the wider bond market.
What crowding out means for Treasuries
Crowding out happens when one group's heavy borrowing takes up so much investor money that other borrowers have to pay more. The concern here was that record AI bond sales would leave fewer buyers for Treasuries and push government borrowing costs higher.
Many analysts say AI borrowing helped drive a selloff that sent longer-dated Treasury yields to their highest levels since 2002 last month, Reuters reported. The committee's report says 10-year yields peaked around 5.4% and 30-year yields around 5.7% in early October.
Why the committee sees little evidence of pressure on Treasury demand
The report says "Treasury auction results show no evidence that 2026 technology-related issuance has crowded out long-end Treasury demand." It says higher yields have mainly reflected growth, policy expectations, and energy prices.
The committee said tech investment may still be affecting rates through stronger economic growth. A regression in its slides, using data from January 2026 on, found no statistically significant effect from tech debt issuance on moves in 10-year yields after accounting for front-end yields, oil prices, and Treasury supply.
The findings come with limits. The report says large bond sales may influence Treasury auction pricing and hedging flows at the margin. The slides also say foreign investors reduced Treasury purchases in 2026 while buying more corporate bonds, though they say that likely reflects recent performance more than issuance.
How large the committee expects the borrowing to get
The slides put tech capital spending at $1 trillion in 2026 and $1.7 trillion in 2027. They estimate operating cash flow at $804 billion and about $1.08 trillion in those years, and put the 2027 funding gap at more than $600 billion.
Tech has accounted for 70% of the increase in investment-grade issuance since 2024, according to the slides, and may exceed 50% of the total in 2027. By the end of 2027, they say, outstanding tech debt will be larger than the entire US high-yield index.
Where AI borrowers are feeling the squeeze
The slides describe lenders as more selective, with lower-rated borrowers facing greater scrutiny. In October, they say, one high-yield AI cloud company's unsecured debt traded at "distressed" levels, and a large data center IPO candidate in Asia-Pacific was withdrawn. The slides don't name either company.
The slides say more than $100 billion of chip deals "moved to close" during the week of October 26, each "indicated at a significant concession to existing indebtedness." They don't name the deals or say how many had completed. A concession is the extra yield a borrower offers on a new deal compared with comparable debt already trading. Chip-backed structures account for 60% of the forecast rise in investment-grade tech borrowing in 2027.
One slide is titled "Circular Financing is a feature." It says some individual compute operators might not remain viable, but that the physical infrastructure will continue to find demand. The conclusions warn that the strength of the group "should not obscure the vulnerabilities of individual borrowers."
How the forecast compares with our AI debt tracker
Our AI debt tracker counts $765 billion of financings that have priced or closed. Of that, about $751 billion is dated 2025 or 2026, which is the period the committee's totals cover.
| Period | Committee (slides) | Our tracker (through November 3) |
|---|---|---|
| 2025 | $201 billion (actual) | $260 billion |
| 2026 | $586 billion (estimate) | $491 billion so far |
| Both years | $787 billion | $751 billion |
These aren't competing counts of the same market. Both include bonds and loans, but the committee doesn't publish a deal list, so the totals can't be matched line by line.
Our tracker logs named deals, including about $140 billion of special-purpose vehicles, project loans, and leasebacks across the two years, along with non-dollar bonds such as Alphabet's euro sales. The committee lists convertibles under equity, while we count them as debt, about $40 billion across the two years. Deals that are only signed or announced aren't in our totals. The committee's 2026 number is also a full-year estimate, and ours stops at November 3.
The committee recommended that Treasury keep monitoring the effects on demand for its debt as this borrowing grows.
